Strategic
Transformation
James S. Gold
Senior Vice-President and Chief Marketing Officer
New York Times Regional Media Group
PANPA Queensland, Australia September 10, 2008
Today’s Agenda:
•
The NYTCO Brand Portfolio
•
Current US Media Landscape
•
Strategic Transformation
•
Balanced Management Approach: The “Ambidextrous” Organization
•
Triad Management Principle
•
Transformational Change @ NYTRMG
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The New York Times Company
Major Brand Portfolio
Regional Media Group
D: 2.5 million c S: 3.0 million c O: 47.2 million u (11th)
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The Growth Imperative: Challenges
Number in Millions
US Circulation/Penetration
Source: Editor and Publisher Yearbook data; U.S. Census Bureau
While US Households continue to grow, paid circulation and penetration falls.
Increasingly, a once powerful mass medium appears to be evolving into an ageing niche player.
Source: NAA
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The Growth Imperative: Challenges
US Newspaper Print Ad Revenue Trend
Billions
1996-2007
Total Print (National, Retail & Classified)
Advertising growth remained strong through the advent of the Internet.
While recent troubles are both cyclical and secular, how deep is the secular change?
Source: NAA
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The Growth Imperative: Challenges
US Classified Revenue Trend
Billions
1996-2007
Classifieds, now under siege from online players, is the site of much of the revenue erosion.
Automotive revenue has declined for 15 consecutive quarters.
Source: NAA
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The Growth Imperative: Challenges
Print & Digital: Crossing The Chasm
The Migration of Print to Digital
The Outlook: Print’s decline, even with digital growth, will drive revenues and earnings downward for years
Source: Concept from “Crossing the Chasm, The Life and Death Threat that Newspapers face in Transitioning
from Print to Online-And what they can do to Survive.” Copyright 2007 by Mark Potts. Data from Newspaper
Association of America, Mark Potts projection
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The Growth Imperative: Challenges
US Newspaper Stocks:
-91%
-92%
-93%
Journal Register
-77%
McClatchy
Media General
-75%
Scripps
Gannett
-74%
Lee Enterprises
New York Times
Washington Post
2003 - 2008
-18%
-99%
With years to go before digital growth will balance print declines,
investors see little opportunity
Source: Yahoo Finance, Merrill Lynch
research 2008 INMA Outlook
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The Growth Imperative: Solutions
Radical Reorganization
“Long-term success inevitably requires that leaders
reallocate resources away from mature and declining businesses toward emerging growth opportunities.
The key to sustained, profitable growth is the ability to
recombine and reconfigure assets and organizational structures as markets and technologies change.”
-Teece, Explicating Dynamic Capabilities: The nature and micro foundations of (sustainable) enterprise performance (2006)
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The Growth Imperative: Solutions
Radical Re-Organization: Ambidextrous Management
“Asset orchestration is how organizations evolve to maintain ecological fitness.
Exploitation is about efficiency, increasing productivity, control certainty and variance reduction.
Exploration is about search, discovery, autonomy, innovation and embracing variation.
Ambidexterity is about doing both.”
-O’Reilly III & Tushman, Ambidexterity as a Dynamic Capability: Resolving the Innovator’s Dilemma (2007)
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Strategic Transformational Change
Ambidextrous Management Principles
•
Simultaneously pursue immediate & sustained growth
•
The ability to simultaneously “exploit” and “explore.”
•
To configure and reconfigure organizational resources.
•
To simultaneously pursue mature and emerging strategies.
•
To gain greater efficiencies in the mature business.
•
To sharpen the organization’s ability to innovate.
Based on “Ambidexterity as a Dynamic Capability: Resolving the Innovator’s Dilemma.” (O’Reilly III and Tushman, Harvard Business School, 2007)
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Consumer
Advertising
Strategic Transformation
Re-Engineering the Organization for Immediate and Sustained Growth
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Strategic Transformational Change
Re-Engineering The Organization: Triad Management Principle
Shared
Resources
Open
Technology
Local
Management
Strategic
Partnerships
A new management approach allocates traditional and key emerging expertise and resources
to maximize return, encourage innovation and accelerate growth
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Strategic Transformational Change
Triad: Circulation Management
Key Strategic & Operational Issues (Circa: 2003)
•
Traditional Group Management: Independent Islands. No Group Synergy or Scale
•
Heavily Reliant on Primitive “Sequential” Mass Telemarketing…DNC Looming
•
No Analytical Metrics or Performance Management, Low New Start Retention
•
Brand and Distribution Management Combined, Poor Branding Quality
•
Call Center Management Issues (Abandonment)
•
No CRM Strategy, Technology or Practices
•
No Knowledge or Expertise in Emerging Digital Marketing or CRM Practices
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Strategic Transformational Change
Triad: Circulation >Audience Development
Shared
Resources
Strategic Planning, Analytics,
Campaign Management,
CRM Strategy
Open Technology
Distribution, Single Copy Sales
Local
Management
Strategic
Partnerships
Call Center, E-Mail,
Direct Mail, Telemarketing,
Technology, Data Management
Distribution and single copy sales remain a local management responsibility.
Subscriber acquisition & retention management and overall strategic planning is centralized. Call center management is outsourced.
Clerical and administrative tasks are automated and provide resource to hire new talent required going forward.
Costs are reduced and the organization gains momentum for moving toward total audience management.
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Strategic Transformation
Circulation Audience/Development
2003
Digital CRM, E-Marketing
Consolidate & Outsource
Call Center
Build Total HH Database
2009
2004
Migrate Call Center to Philippines
2008
Add Demographics to Database
Multi-market DM, TM, EM Campaign Calendar
Audience Management for Brand Portfolio
Provide DBM/DM Services
2007
Develop Campaign Mgmt. & Analytics
Automate Admin & Clerical, Centralize
Strategy, Budgets, Planning &
Implementation, Consolidate Vendors
2005
2006
Add PRIZM Lifestage Data
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Strategic Transformational Change
Circulation > Audience Development
Immediate Growth Impact: 2008 vs. 2006
•
Annualized Source Savings Exceeds $1 Million (> 20%)
•
Reduction in Discount Investment of 30%
•
Increase Revenue/Subscriber of 8.4%
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Strategic Transformational Change:
Brand/Audience Portfolio Map
Younger Years
31% of Market
0%

20%

40%

60%

80%

100%
 Segment Penetration
Family Life
10% of Market
Mature Years
59% of Market
 Daily Newspaper
 Magazines
 Weekly Newspapers
 Online
Source: NYTRMG Marketing
Consumer Marketing expertise broadens to include entire print and digital brand portfolio
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Advertising
Strategic Transformation
Re-Engineering the Organization for Immediate and Sustained Growth
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Strategic Transformational Change
Triad: Advertising Management
Key Strategic & Operational Issues (Circa: 2006)
•
Management Islands
•
Duplication of Creative Services
•
Little Resource Share or Best Practice Development
•
Little Rep or Management Visibility into Account History or Prospects
•
No Continuity (Attrition and Absences)
•
Only 20% Time in Sales. Travel, Administration & Clerical Dominates Day
•
Questionable SMB Account Profitability
•
Little NBD (Creative or Prospecting): Only 20% Market Penetration
•
Low Consultative Sales Approach
•
Little Digital Expertise
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Strategic Transformational Change
Triad: Advertising Management
Shared
Resources
Strategic Planning,
Analytics, Campaign Management,
National/Regional Account Management,
Creative Services and CRM Strategy
Open
Technology
Select Mid- Major Account
Management
Local
Management
Strategic
Partnerships
Call Center/SMB Management,
Self-Serve Ad Production and
Select Creative Services
Major Retail & Classified accounts are managed locally or centralized. Classified Transient and SMB accounts are outsourced.
Creative Services are centralized with some work outsourced to India. Marginally profitable accounts are migrated to self-serve technology
or call center.
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Strategic Transformation
Advertising Management CRM
2006
CRM due diligence
Strategy Formula:
Digital Sales Development
NBD + LCV + Ops E = EG
2007
2009
Complete Business Database
Interactive SFDC Rollout/Ops Efficiency
13 markets in 18 months
Call Center Migration
E Campaign Management/Lead Gen
Test India Outsourced Creative
Creative Centralization
Self-Serve Pilots
Creative Tech Due Diligence
Sales Channel Strategy
2008
Profitability Analysis
SuperSite in Tuscaloosa
Iterative Creative Rollout
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Strategic Transformational Change
Networked Advertising Management
Research
COO
Data
CMO
Publisher
Sales Presentations
Ad Director
CFO
Controller
Reporting
Creative Services
Biz Office
Local Creative
Group Creative
Spec Ad Database
Offshore Creative
Advertising & Marketing Managers
Wireless
Connectivity
Local Sales
Call Center
Campaign Management
Ad Rep
Ad Rep
EM
Ad Rep
DM
Ad Rep
TM
Ad Rep
Ad Rep
Business
Continuity
Web-based CRM connects each rep and all customers to a global network of support
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Strategic Transformational Change
NYTRMG Marketing Assets & Strategic Partners
Circulation Call Center
Manila, Philippines
Classified Call Center
Green Bay, WI
Marketing Database
Denver, CO
Sales Management
Madison, WI
Strategic Sourcing
Creative Services
Norfolk, VA
Tuscaloosa, AL
Creative Services
Gurgaon, India
Acquisition Call Center
NYTRMG Financial
Phoenix, AZ
Lakeland, FL
NYTRMG Marketing
Tampa, FL
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Strategic Transformational Change
Summary & Recommendations:
Strategic:
•
Growth requires clear vision and strategic organizational transformation
•
Gain efficiencies in mature business & sharpen innovation capability in emerging business
•
Develop Triad perspective. Centralize and/or Outsource. Keep Local only what must be Local
•
Identify key expertise and positions going forward
•
Develop 3 year Strategic Roadmap, financials and major earnings initiatives
•
Insist on accountability
•
In all things, think & act: Transformational, not Incremental
Tactical:
•
Strong change leaders & project management coordination to orchestrate the Roadmap
•
Transformation will be full time employment for many for years.
•
Standardize and simplify before you Centralize or Outsource
•
Out of sight is not out of mind. Learn Virtual management
•
Leave no stone unturned, no sacred cows.
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Thank you.
James S. Gold, SVP/CMO, New York Times Regional Media Group james.gold@nytrng.com
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